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A, B, C and D share profits in the ratio 2:2:3:3. C retires, and the new profit-sharing ratio of A, B and D becomes 3:2:5. Which partner has no increase in their profit share?

Answer and explanation

Correct answer: B

The total of the old ratio is 10. B’s old profit share was 2/10, and the new share is also 2/10; therefore, B has no increase in profit share. In contrast, A’s share rises from 2/10 to 3/10, and D’s share rises from 3/10 to 5/10. Exam tip: Calculate new share − old share for each continuing partner to identify the gain.

Related tags

Goodwill SettlementRetirement Of PartnerProfit Sharing RatioGaining SharePartnership AccountsReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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